In Oregon and most other places, a trade secret is anything that:
(a) Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and
(b) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
Before getting to the two criteria, I should mention that stealing trade secrets is, of course, a bad thing and thieves are subject to money damages, attorneys fees, injunctions preventing further misappropriation, and/or criminal liability.
Valuable business information typically includes drawings, cost data, customer lists, formulas, patterns, compilations, programs, devices, methods, techniques or processes. Unlike a kid that knows what his sister is getting for her birthday, businesses can rely on trade secrets to protect valuable information for a very long time. Coca-Cola, Co. owns one of the oldest and most famous trade secrets–the formula for Coke.
The trick about trade secrets though, is that they have to remain secret or their power is gone. Thankfully, courts look to a specific set of factors when deciding whether or not a business acted reasonably under the circumstances to keep something secret:
- The extent to which the information is known outside the owner’s organization;
- The extent to which it is known by employees and others involved in the organization;
- The extent of measures taken by the owner to guard the secrecy of the information (e.g., labeling the information “Trade Secret” or “Confidential,” advising employees of the existence of a trade secret, limiting access to the information within the company on a “need-to-know basis,” and controlling company access);
- The economic value of the information to the owner and the owner’s competitors;
- The amount of effort or money expended by the owner in developing the information; and
- The ease or difficulty with which the information could be properly acquired or duplicated by others.
Businesses should use these factors as guidelines when developing policies and procedures to protect their trade secrets. Businesses can also guard against theft or unintentional disclosure of trade secrets by having reasonable confidentiality, non-disclosure, and termination from employment/severance agreements in place.